The war in Ukraine, which has unleashed fears of an energy supply crunch and pushed oil prices to record highs, has brought back to the forefront the conversation about the need for new investments in oil and gas for the foreseeable future. That’s in stark contrast to calls almost a year ago by the International Energy Agency (IEA) to forgo investment in fossil fuels in the race to a net-zero emissions world. As the calls multiply for Gulf producers to step in and fill the gap in gas and oil supplies as Russia faces sanctions, producers now feel vindicated after being shunned, and even targeted, at the U.N. Climate Change Conference (COP26) in Glasgow last year. This newly regained confidence is also pushing the limits in the political conversation between the Gulf and the West, with OPEC powerhouses Saudi Arabia and the UAE rejecting calls from the U.S. and other allies to squeeze Russia out of their OPEC+ alliance as part of the U.S. and NATO-led pressure campaign against Moscow to end its war on Kyiv.
In early March, less than two weeks into Russia’s invasion of Ukraine, oil prices hit a record high of $139 per barrel, the highest in about 14 years, while gas prices in Europe more than doubled. The market volatility and coordinated rounds of sanctions targeting Russia’s economy sent shockwaves across Europe and the U.S. Oil prices have fallen slightly since, but both Brent and West Texas Intermediate benchmarks are still averaging above $100 per barrel, way above the averages seen before the COVID-19 crisis hit the world in 2019.